Etihad targets Star, Oneworld with new Partners brand

The obligatory but useless Oneworld livery on an American Airlines jet

Updated The big two global alliances Star and Oneworld are in trouble tonight, with the announcement of the Etihad Airways Partners brand.

In the initial announcement Partners appears to pledge itself to do precisely what the big two global branding schemes promised to do yet failed to do ever since they were founded 16-17 years ago.

That is, to quote James Hogan, the president and CEO of Etihad Airways:

“Frequent flyers will benefit from the formation of Etihad Airways Partners as it will remove the complexity and confusion that exists within the global alliances. We’re aiming to deliver a consistent experience for frequent flyers when they travel, as well as a consistent framework for earning and using their miles.”

Those who have been royally screwed around by the often punitive exclusions, variations, conditions and at times downright unpleasant or petty games the various Star and Oneworld carriers play against each other’s members will want to hold Etihad Partners to this superb, and by others, dishonoured goal, which could set a standard that the big two alliances would be unable to ignore indefinitely.

Etihad later issued a statement emphasising that it was launching a brand not an alliance. However brands are perforce about loyalty, and as the Partners brand announcement specifies, it is about doing things in relation to customer loyalty that it criticises the alliances for not doing.

There will be other consequences from Etihad Partners, which was launched with this brief statement:

Etihad Airways today unveiled Etihad Airways Partners, a new brand which brings together like-minded airlines to offer customers more choice through improved networks and schedules and enhanced frequent flyer benefits.

Initially, six airlines will participate in the new partnership – airberlin, Air Serbia, Air Seychelles, India’s Jet Airways, Darwin Airline, and Etihad Airways.

However, any airline can become an Etihad Airways Partner even if it is part of an existing alliance, such as airberlin, which is a member of oneworld.

The key emphasis for Etihad Airways Partners is a strong commercial partnership and shared values.

James Hogan, President and Chief Executive Officer of Etihad Airways, said “We are broadening our business model to articulate and define a partner proposition for like-minded airlines which will result in synergies and efficiencies for participating airlines on the one side, and enhanced network choice, service and frequent flyer benefits for the consumer on the other.

“The Etihad Airways Partners logo is a seal of excellence and global cooperation. It will be displayed on aircraft and on branded materials by a group of airlines working together to connect travellers around the world, and increasingly to harmonise standards in the air and on the ground.”

“The potential for network alignment to maximise flight connectivity for passengers, together with a shared passion for superior service, are central to the ethos of the Etihad Airways Partner concept,” he said.

“Frequent flyers will benefit from the formation of Etihad Airways Partners as it will remove the complexity and confusion that exists within the global alliances. We’re aiming to deliver a consistent experience for frequent flyers when they travel, as well as a consistent framework for earning and using their miles.”

This will include standardised mileage and tier benefits across all partners, no blackout periods and priority services.

Etihad Airways Partners will also have access to economies of scale and operational synergies such as centres of excellence, shared sales teams in certain destinations, joint procurement of services and supplies, and shared pilot and cabin crew training at the Etihad Airways facilities in Abu Dhabi.

What will it mean to members of Virgin Australia’s Velocity program, which very interestingly, recently merged its benefits in terms of earn and burn with those of Singapore Airlines’ Krisflyler program?

The relationship between Singapore Airlines and Etihad as major shareholders in Virgin Australia Holdings appears to be cooperative, but it cannot also fail to be competitive, since they both want Velocity members to chose thir services for many destinations in Europe, the UK, and central Asia, and with Velocity rewarding whichever choice is made with points and status credits.

Similarly but with much less overlap, Air New Zealand as the major partner in VAH is, like Singapore Airlines, in the Star Alliance.

At the very least, Etihad would in terms of its announcement tonight, welcome Virgin Australia into the partner brand, but what effect might that have on the soon to be partially spun off Velocity program? It will come down to ownership of the loyalty of the Virgin flyer, who is presumably going to decide whether to think of him or herself as a Partners or Velocity person, which will have implications for the value of each brand.

There are some tricky questions to be resolved, as there will be in Qantas, which has, as it should have, structured its reward program to be much more attractive to those who fly a Qantas service than on some of the competing services of other Oneworld partners with whom it allegedly offers meaningful reciprocity.

The Etihad Partners announcement is a signal that it cannot be business as usual for Star, or Oneworld, or Velocity, or the Qantas Club, if the clear intent of its statement is turned into an alternative multi-carrier loyalty program, with its shield or brand incorporated in the livery and promotional programs of Virgin Australia and other carriers than fly under that banner.